In Alberta, tentative steps toward a smarter grid

With transmission costs poised to escalate, a more intelligent system beckons

By Duncan Kinney

October 01, 2011

Illustration by Michelle Thompson

Somewhere in a nondescript building on a nondescript street in Calgary lives the hive mind of Alberta’s electricity grid. Called the System Co-ordination Centre, it monitors, analyzes and directs the safe and reliable operation of Alberta’s grid in real time every hour of every day of every year. Alberta’s Electric System Operator – called AESO for short – is the landlord. The center meets the stringent security demands of North American Electric Reliability Corporation, CSIS, the RCMP and many other acronym-laden organizations. Information about the site is deemed confidential and subject to nose-tapping, need-to-know rules.

System controllers face information-dense, graph-laden screens in a room reminiscent of the Big Board from the famous 1960s film Dr. Strangelove. There they work alternating 12-hour shifts as they manage the traffic on Alberta’s two provincial interties (transmission system connections between neighboring electric systems) and oversee the arbitrage between electricity generators and consumers – all to ensure the grid runs reliably. But what if you were able to take the real-time immersive data available at the System Co-ordination Centre and make it richer? Then imagine you could take those real-time bits and bytes and make them available to all members of the electricity system. You’d be left with what’s being called the smart grid.

Few agree on exact and specific definitions of what makes a grid smart. But there are some broad strokes where consensus exists. The idea of the smart grid is inextricably tied to some of the technology megatrends that are affecting everything from online search to retail. We’re transitioning from a world of limited sensing, where you only know one thing at one time, to one of deep situational awareness, where you know everything at all times, as a matter of course. Once upon a time, companies dealt with data in a batched format; now it’s dealt with in real time. Centralized control and limited security were once the norm; now you have distributed control and pervasive security for anything that’s connected. Proprietary and purpose-built standards have given way to open standards that allow and encourage innovation. These are the brush strokes that define the smart grid. As you can see, it’s much more than smart meters.

A grid with a higher IQ would take advantage of the immersive data that will become available when modern information technology infrastructure and architecture is finally added to the system. Some of the first tentative toes that were dipped into the smart grid water in Alberta belonged to Enmax Corp. The Calgary utility signed a memorandum of understanding with IT giant Cisco in March 2010 to explore smart grid possibilities. The agreement expired following the resignation of Enmax CEO Gary Holden, who was facing questions over executive compensation and lavish spending.

In the meantime, the Department of Energy had the Alberta Utilities Commission undertake an official inquiry into the smart grid in 2010. It canvassed market participants from transmission, distribution and generation companies and stakeholders as well as ordinary citizens (full disclosure: I participated in this inquiry as a private citizen). The results were presented to department officials in January 2011, but as this magazine went to press nothing had been made public.

Todd Gurela, the director of global smart grid sales with Cisco, thinks the inquiry was a great idea, and not just because it means potentially more sales for Cisco. “That will make it clear for the utilities how they need to go about their investments,” Gurela says. “I think it was a very intelligent move to do what Alberta did, to actually call that inquiry instead of going about it piecemeal with different cases. Let’s figure out what we’re really trying to achieve and therefore the measures of success that the utilities will have.”

Gurela expects to continue to talk with Enmax on the smart grid and has confirmed recent conversations with Epcor Utilities Inc. However, any and all big smart grid upgrades and announcements will be coming after the official government reaction to the smart grid inquiry.

Rolling out smart grid upgrades isn’t some one-size-fits-all solution, either. There are different levels of need for upgrades among utilities. For instance, it made sense for Atco Power to invest in one-way automated meter reading before companies like Epcor and Enmax did. Atco’s rural customer base is dispersed, so paying upfront for that technology made sense. In Edmonton and Calgary, meanwhile, you still have people in coveralls dodging dogs in backyards in order to read the meter because the density of those urban spaces means those companies could continue to cost-effectively employ meter-readers.

The 800-pound gorilla in the room when it comes to implementing a smart grid is always going to be who pays and how much. With an already strained rate base and the provincial NDP predicting astronomical increases in costs from the Bill 50-enabled critical infrastructure projects, the appetite for the smart grid seems low in Alberta.

The interests of established market players also don’t necessarily align with the needs of consumers and public policy on climate change. Former Canadian Gas Association president and CEO Michael Cleland, now the Nexen executive-in-residence at the Canada West Foundation, identified the fundamental problem in the overlapping relationship between generators, utilities and the smart grid. “There’s inevitably a tension, and anybody who denies that is being a bit silly. If you’re a commodity producer, you obviously want to sell more, and the more demand there is it will tend to drive prices higher,” he says.

Because the smart grid makes things like demand response, peak shaving, energy conservation and the integration of less energy-dense forms of renewable energy possible, butting up against entrenched interests seems inevitable. But make no mistake: whether it’s a smart grid or its hub-and-spoke counterpart, it’s clear that the bill is coming due.

Tim Weis is the director of renewable energy policy and efficiency at the Pembina Institute. Weis holds a PhD in environmental sciences from the Université du Québec à Rimouski where he studied wind energy development in remote communities. He knows Alberta’s electricity grid backwards and forwards and he sees the prices going nowhere but up. “There is no reason to think that transmission and distribution costs are going down. In fact, those are going to be driving prices up faster than generation,” Weis says.

Not only will smart grid upgrades drive up costs, but with roughly 50 per cent of Canadian transmission infrastructure 50 years older or more, we’re operating on borrowed time. It’s like we’re driving that old reliable car that’s been a steady performer but is, regrettably, nearing the end of its useful life. So what do you do? Do you upgrade to the fancy new import or do you stick it out with the old reliable domestic?

At Pembina, Weis doesn’t see a whole lot of movement on the smart grid front. Companies have expressed little interest in making hard decisions about future investments. “I don’t think anyone in the game right now, at least in Alberta, is really jumping at the smart grid, Enmax being the exception to that rule,” the policy analyst says. “Even in Ontario where they are forcing some of this development to happen, it’s the government driving it. I don’t really know the reason for that but there seems to be a disconnect between who the smart grid helps and who ends up bearing the cost.”

Somewhere between a wild new electricity grid information superhighway and the status quo, the utilities will continue to provide reliable power, chug along and record decent profits. The question becomes: Is government interested in giving new market players space to innovate between generation, distribution and transmission? There are successful precedents. In the U.S., publicly traded EnerNOC, based in Massachusetts, already exists in that space. It offers a whole host of smart grid-enabled services, such as demand response, energy efficiency, energy procurement and carbon management applications.

The tantalizing possibility of virtual power plants also exists. A virtual power plant is not actually a power plant, mind you. It’s the idea of a power plant that can shift from traditional generation to smart-grid enabled renewables at will. Current virtual power plants that exist combine solar, wind, biogas and energy storage with intelligent demand response systems. While a virtual power plant still sells electricity, it also sells load relief and the reliable integration of smaller, more distributed renewable energy systems. The software and the hardware needed for a virtual power plant is still in its early stages, but the technology offers an intriguing possibility for grid operators and utilities to reliably integrate the smart grid with cleaner, greener sources of electricity generation.

Alberta would seem a natural testing ground for innovative electrical systems. The home of deregulated markets prides itself on fostering innovation, creating value and letting entrepreneurs be entrepreneurs. And with tens of billions of dollars of investment needed in the national electricity system over the next 20 years, getting the smart grid right would prove the province is prepared to lead.